Profitability of Dispersion Trading in a Less Liquid Market

Dispersion trading is an options trading strategy that capitalizes on the spread or difference in implied volatility between index options and individual stock options. The basic premise involves selling index options while simultaneously buying options on individual components of the index. Traders expect that the implied volatility of individual stocks …

Covariance Risk Premium as a Predictor of Market Returns

Various prediction methods are employed in the stock market, leveraging diverse techniques and data sources. Fundamental analysis delves into a company’s financial health, examining factors like earnings, assets, and management. Machine learning and artificial intelligence have gained prominence recently, using algorithms to analyze vast datasets and identify patterns elusive to …

Does Kelly Portfolio Outperform the Market?

Position sizing is a critical element in effective portfolio management, playing a pivotal role in determining the overall risk and return characteristics of an investment portfolio. Proper position sizing involves allocating an appropriate proportion of capital to each investment, considering factors such as the investor’s risk tolerance, investment goals, and …

Improved Martingale Betting System- Does It Work?

The martingale betting system is a popular gambling strategy that involves doubling one’s wager after each loss in the pursuit of recovering previous losses and securing a profit equal to the original bet. The underlying idea is that, statistically, a win will eventually occur, allowing the player to recoup losses …

How Volatility and Commodity ETFs Impact the Markets

Exchange Traded Funds (ETFs) have undeniably transformed the financial industry, providing investors with unprecedented ease of access to diverse portfolios. However, their impact on the market isn’t uniformly positive. The surge in ETF popularity has raised concerns about potential distortions and increased market fragility. Critics argue that the sheer size …

How Long Do Grantees Hold Onto Their ESOs?

Employee stock options (ESOs) are a compensation tool offered by companies to their employees, granting them the right to purchase shares of the company’s stock at a predetermined price. ESOs serve as incentives for employees, aligning their interests with the company’s success and long-term growth. Typically, these options have a …